U.K. to Publish Report on Flawed RPI Inflation Gauge This Month

(Bloomberg) -- The U.K. Treasury will later this month publish its response to a consultation on how to fix a flawed measure of inflation that affects part of the bond market.

The government and the U.K. Statistics Authority will release their report on Nov. 25, Chancellor of the Exchequer Rishi Sunak said in a letter published Monday. That follows a public consultation on how to bring the Retail Prices Index into line with the authority’s preferred measure of consumer prices and housing costs, known as CPIH.

The government has previously said it plans to overhaul the long-maligned measure by 2030 after years of calls for it to be scrapped or reformed. The issue has seen RPI stripped of its designation as a “national statistic” -- a form of quality mark -- but it remains the reference for inflation-linked bonds, student loan repayments and rail fares.

Fixing the controversial measure requires approval from the chancellor because it would cause “material detriment” to RPI-linked bond holders by potentially lowering returns.

The consultation started in March and was due to conclude in April. It was kept open until August due to the coronavirus outbreak.

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